As expected, the EURUSD has not only found a support which clearly comes from the past but has created an Inverted Head and Shoulder on the daily and 4 hours timeframe. An Inverted Head and Shoulder is a significant reversal pattern created by the Big Boys to communicate a reversal in the market. I want to point out the difference between Inverted Head and Shoulders. In the case of the EURUSD, the inverted pattern created does not necessarily mean a complete reversal for a new uptrend, but instead communicates a corrective reversal for more continuation as a sell.
Between the opening of the Asian Market and the early hours of the London Market, we might see some volatility due to the Italian constitutional vote. If it’s a NO vote, I suggest that we trade the EURUSD AFTER the short sell as long as it doesn’t negate the Inverted Head and Shoulder. As mentioned previously, we also need to be vigilant on Thursday 8th December, as the ECB will decide if there is a change in interest rates. No change is expected.
Trade idea: If it’s a NO vote, I will be waiting for a possible strong sell move and will then start buying the Euro, only if the price does not go below the support area shown to us last week. In the London Live Trading Room we will look at the take profit price level if there’s an opportunity to buy.
If it’s a YES vote, I will expect two outcomes: no strong move in the EURUSD or strong buyers coming into the market. I will buy the EURUSD only after the retracement of the first impulsive move as a buy.